Lansner: Surprises for real estate in '14

Imagine one year ago – amid a presidential political hangover dusted with a splash of fiscal cliff – dreaming that 2013 would bring housing markets producing double-digit price gains.

That wasn't a hallucination. It was what exactly we got, economically speaking, even if virtually all pundits and prognosticators were wrong about the vibrancy of an economic revival that outran heavy skepticism.

Part of the problem with forecasting, to be fair to those who get paid to guess, is that analysts are asked what probably will happen. Few people like looking silly with bold estimates that might prove off the mark. As a result, forecasting tends to produce vanilla-like outlooks filled with guarded optimism mixed with seemingly required doubts.

To attempt to break that mold, I enjoy asking experts not what they think may happen, but what might be the economic surprise we'll be talking about a year from now. It's more gut feel than science, but what great idea came out of a spreadsheet, anyway? If nothing else, it's entertaining.

So congrats to those of you who profited from 2013's surprises. As for 2014, remember, you read it here first (hopefully) and learned what might stun the region's real estate community!

Could we see doom for boom? Economist Essie Adibi from Chapman University put this slowdown surprise out there – with the caveat that the probability would be low. He said it is possible that the 10-year Treasury bond yield could jump above 4 percent; the S&P stock index could fall 20 percent; mortgage rates could jump to 5.5 percent; and home prices could dip more than 5 percent. “The culprit will be higher inflation and slow productivity growth,” Adibi says.

Or doom for gloom? Housing analyst John Karevoll of DataQuick foresees “the welcome decline into deserved obscurity of real estate naysayers and their canned think-tank narratives. Missing the real estate market bounce-back mode was bad enough for these finger-waggers. But the naysayers will become irrelevant as they doubt housing's continued march to more normal, positive conditions. Good riddance to them.”

Where are the homes? Real estate agent Veronica Hicks of CondosEtc. wonders who will join the next group of homesellers. She notes that in recent years the market saw: 1. Cash sales at low prices. 2. A bounce-back in pricing. 3. Owners taking advantage of ridiculously low interest rates by refinancing.

Hicks says, “Either of these factors, or a combination of the two, will make it difficult for an owner to think about the significant increase in living costs when it comes time to sell and move into a higher cost home.”

What, more foreclosures? Daren Blomquist of foreclosure tracker RealtyTrac notes this potential economic/political ricochet from California's year-old, foreclosure-slowing Homeowner Bill of Rights: “Although we hate to be a Debbie Downer, we do believe in California there will be a mini-surge in foreclosures. In other states with similar legislation, the pattern is an immediate slowdown in foreclosure activity, which we've certainly seen in California this year, followed by a catch-up period where foreclosure activity spikes as lenders work through those delayed by the legislation.”

Office rents to jump? Tucker Hughes of commercial real estate specialist Hughes Marino says “the pendulum is quickly swinging in favor of landlords, which means higher rents, less concessions – but most importantly, fewer space options.” That means locking in longer leases or buying facilities. “For businesses who own their building – or who are interested in purchasing a building – the time is still ripe for cheap debt.”

Shopping with sleeping? Trish Esser at KTGY architects has clients talking a new game plan. “Big retail and mall developers are buying up land and working to put both malls or high-end retail with residential towers. It's very interesting because in the past these types of clients didn't get anywhere close to the residential housing world.”

And finally, backyard fish farming? This home-grown fad comes from chef Andrew Gruel of Slapfish Huntington Beach. “People are already becoming experts in the field of urban foraging and rooftop gardens. Tilapia and catfish are easy fish to grow and require nothing more than a tank and some feed.”

And the impact on restaurants?

“Pretty soon we will see people bringing their own fish ... BYOF promotions where you bring your own fish and the chef cooks it up.”

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